Ronaldo Saiolo Ni Togu

1907521160

CAPITAL MARKET

Indonesia had experienced economic devastation that had been built through the joints of the
new order policy began crawling back construct the foundation of the economy. International
Financial Corporation (IFC) classification of stocks linked to the classification of the state. If the
country is still classified as a developing country, the market in the country is also in a
developing stage, although market shares are fully functional and well organized.

Developed capital markets can be identified through a country, whether the country is a
developed country or a developing country classified. Indicator is the per capita income of a
country, which is usually included in the low to middle- income countries. But the most striking
characteristic is seen the value of the market capitalization of companies listed, the cumulative
trading volume, the tightness of capital markets regulation, sophistication and culture to domestic
investors.

Consequences of growing capital market is a small market capitalization value. A measure of

market capitalization ratio is usually seen from the comparison with the value of a country’s
gross domestic product. In addition to the other consequences is the presence of thin trading
volume (thin trading) caused by trade (non – syncronous trading) on the market. Synchronous
trading is not caused by the number of securities traded not entirely, meaning that there is some
specific time in which a securities transaction does not occur (Hartono, 2003). Indonesia which is
still listed on the IFC is still a developing country with the worst investment climate in the East
Asian region. Even with a record like that, in fact we are still considered by foreign
investors. The fact that there are national companies with actually being in the strategic sectors
of the country, offered by some foreign institutions through the acquisition of shares. The
presence of capital inflows as investments in general is foreign investment should be a booster of
the macro economy. The main reason for foreign investors to move their funds to developing
countries is that developing countries have the potential untapped business entirely, as in the
classic motifs of investment to other countries. Michael Fairbanks and Stace Lindsay senior
consultant at Monitor Company express purpose of foreign investors coming to the poorer
countries is usually only see an opportunity to attract natural resources, cheap labor and wages as
the target product or service that is not good quality.

But there are other reasons that accompany such motives, the striking differences with developed
countries. If we use a life cycle approach to the business of developing countries into the
category growth (growth) than developed countries that fall into the category of ripe (mature). It
means that there is the attraction of high economic growth which of course is accompanied by a
high return anyway, because economic growth is an aggregate indicator of industry in a
country. For example, the mobile telecommunications business in Indonesia, which explored the
new solid in Java alone, while outside it still has high potential to serve new markets.